Standard Chartered Predicts Bold Fed Rate Cut Amidst Labor Market Slowdown
Standard Chartered now anticipates a 50 basis point interest rate cut from the Federal Reserve due to weak August job data indicating a faltering labor market. This projection revision follows a surprising rise in unemployment and sluggish non-farm payroll growth, altering the earlier forecast of a modest 25 basis point cut.
Standard Chartered has revised its forecast, expecting the U.S. Federal Reserve to slash interest rates by 50 basis points at its upcoming policy meeting. This change comes in response to disappointing August jobs data, which indicated that the labor market is cooling significantly.
In a recent client note, Standard Chartered described the labor market's swift transition from 'solid to soft' within six weeks, citing non-farm payrolls rising by a mere 22,000 in August, drastically underperforming the expected 75,000 increase. The unemployment rate also climbed to 4.3%, ending a 15-month period of stability.
Bank of America, following the same data, has also adjusted its predictions, now foreseeing two rate cuts of 25 basis points each in September and December. Meanwhile, Standard Chartered anticipates no further cuts beyond September, attributing this stance to persistent inflation and impending fiscal easing measures.
(With inputs from agencies.)
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